You've probably heard that younger investors should take more risk. But what happens as you get older? Do you just wake up one day and suddenly shift everything to bonds? The answer involves something called a glide path—a gradual, systematic way of adjusting your investment mix as you move through life.

Think of it like slowly easing off the accelerator as you approach your destination. You don't slam the brakes a mile from home. You adjust your speed based on how close you are. Your portfolio deserves the same thoughtful transition, and understanding how this works might be the most important investment concept you ever learn.

When you're 25 and the market drops 40%, you have decades to recover. You're still adding money to your accounts. You haven't touched a dime yet. A crash at 25 is actually an opportunity—you're buying stocks on sale during what will become a small blip in your lifetime investing story.

Now imagine you're 62. That same 40% drop hits different. You might be three years from retirement. You've stopped adding as much. Soon you'll need to start withdrawing from these accounts. There's no time machine. The math that helped you at 25 now works against you.

This isn't about being scared of risk—it's about respecting time. Your ability to absorb losses shrinks as your timeline shortens. The money you'll need in five years simply can't handle the same volatility as money you won't touch for thirty. This is risk capacity, and it naturally decreases as you age, regardless of how brave you feel.

Takeaway

Risk tolerance is psychological—how much volatility you can stomach. Risk capacity is mathematical—how much volatility you can actually afford. As retirement approaches, capacity matters more than courage.

The classic glide path gradually shifts your portfolio from stocks to bonds over time. A common rule of thumb suggests holding your age in bonds—so 30% bonds at 30, 60% bonds at 60. But modern approaches are more nuanced, recognizing that people live longer and still need growth in retirement.

The key is making transitions gradual rather than sudden. Target-date funds do this automatically, typically shifting about 1-2% per year from stocks to bonds. This systematic approach removes emotion from the equation. You're not trying to time the market or guess when to get conservative—the plan handles it.

Here's what surprises many people: you don't abandon stocks entirely at retirement. Most glide paths continue holding 30-50% in stocks even after you retire. Why? Because retirement might last 30 years. You still need some growth to outpace inflation. The goal isn't eliminating risk—it's finding the right balance between growing your money and protecting what you've built.

Takeaway

A glide path isn't about fleeing from risk—it's about systematically matching your portfolio's volatility to your shrinking time horizon while maintaining enough growth potential to sustain a potentially decades-long retirement.

Target-date funds assume everyone retiring in 2045 has the same situation. But your life isn't average. Maybe you have a pension that covers your basic needs, meaning you can afford more stock exposure. Maybe you plan to work part-time until 70. Maybe you're supporting aging parents and need more liquidity sooner.

Consider three factors when customizing: your other income sources, your actual retirement timeline, and your spending flexibility. Someone with guaranteed pension income can stay more aggressive. Someone who might need to retire early due to health should get conservative faster. Someone who could cut spending 20% in a downturn has more flexibility than someone with fixed obligations.

The standard glide path is a starting point, not a prescription. If you're using target-date funds, at least check that their assumptions match your reality. Some funds land at 30% stocks at retirement, others at 50%. That difference matters enormously. Your personal circumstances should dictate your personal path.

Takeaway

A standard glide path assumes an average person in average circumstances. Since you're neither, treat default assumptions as a baseline to adjust rather than a rule to follow blindly.

Your portfolio's journey from growth to preservation shouldn't happen by accident or panic. It should unfold gradually, intentionally, and in alignment with your changing relationship to time and money. The glide path concept gives you a framework for making these shifts systematically.

Start by understanding where you are today and where your current investments will land you at retirement. Then decide if that destination matches your actual needs. Small adjustments now compound into significant differences later. Your future self is counting on present-you to chart the right course.